MAN ABOUT TOWN: Inside Story on Oakwood Apartments
By GEORGE SOUTHERN
Falls Church Times Staff
If, like me, you have a tax bill from the City of Falls Church due December 5, you might be interested to read about Oakwood Apartments. That’s the 576-unit short-term rental complex on Roosevelt Boulevard, adjoining Oakwood Cemetery. The proximity is just a coincidence: although Oakwood Cemetery dates to 1799, the first Oakwood apartment complex was built in 1969 in San Diego, California.
The brand expanded under the name “Oakwood Corporate Apartments,” with the idea that business people away from home for several weeks or months would much prefer living in a furnished apartment over a hotel room, especially if the price were the same.
My first encounter with Oakwood Apartments was in 1990, when I bought a Volkswagen van from a colleague in the U.S. Foreign Service. He was moving to Australia, and couldn’t take his van with him. I picked up the van at Oakwood, where he and his family were living for a few weeks until they boarded their plane.
In the years since then, Oakwood Apartments has become increasingly popular for short-term rentals by my colleagues at the State Department. And not just for a month or two – many State employees stay for a year, or at least a school year. Because if you’re in the Foreign Service and have school-age children, the City of Falls Church has become THE place to locate for short stays between overseas assignments.
It’s not just at Oakwood, of course. The town house adjacent to mine has been rented as short term furnished housing to State Department employees for two of the last three years. Each family had several children in school. And another colleague of mine moved to Pearson Square specifically until her son finishes high school.
Oakwood shuttle: "All aboard for the Foreign Service Institute."
But Oakwood remains the most popular. Why? Perhaps it’s the free shuttle service Oakwood provides to the State Department’s Foreign Service Institute in Arlington, next to the National Guard facility at the corner of Route 50 and George Mason Drive. This is the State Department’s language school, offering 26 weeks’ instruction in “world” languages like Spanish and French, and 44-week courses in “hard” languages like Arabic and Chinese. Another plus for Oakwood is its proximity to the East Falls Church Metro stop – with the choice of walking or taking another convenient shuttle bus.
I don’t know exactly when Oakwood was built, but I’m guessing early 1980s, after it was known that the Orange Line Metro would be built nearby. At the time, City officials doubtlessly saw the complex as a win-win for the City. “Corporate” apartments were for businessmen, right? Not school children.
But statistics compiled by Falls Church City Schools tell an expensive story of unintended consequences: the student boom at Oakwood.
When I bought the VW from my colleague, there were 12 students living at Oakwood attending City schools. That was the 1989-90 school year. Five years later, in 1994, the student population had increased to 20. By 1999 it was 45. In 2002 it rose to 67. And today that number stands at 92 students. The entire City Schools population is 1,993, so Oakwood Temporary Housing represents close to 5 percent of the City’s students.
I guess we should be proud. A few years ago I ran into a colleague I had known in Brussels, who was back at FSI for language training. I knew he owned a house in Alexandria, near Old Town, so I was surprised to see him standing out front of FSI, waiting for the Oakwood shuttle bus. Here’s the story: While undergoing long-term training for an overseas assignment, the government will pay your housing costs in Washington – except if you live in your own house. Then you get nothing. So my friend continued to rent out his Alexandria home while he and his family stayed at Oakwood, and his two sons attended City schools. I certainly don’t blame him.
Now let’s do the numbers: The nice round figure I’m hearing about cost per student in City schools is $20,000. Maybe that factors in anticipated bond servicing for building a new school, because the raw math ($30 million divided by 2,000 students) is $15,000. Taking the lower figure, the cost to the City for the 92 students at Oakwood is $1.38 million. This year the City is collecting $744,000 in taxes from Oakwood, or $636,000 less than will be spent on Oakwood school children. That figure of course doesn’t include any of the other costs the City incurs in providing services to Oakwood.
Comments on this topic in the past have included the sentiment that it’s just wrong to single out one sector of the housing market and then point fingers. I disagree, and here’s why: when my family moved to Falls Church in 2002, we sent two children to City schools, and my taxes did not begin to cover the education expense to the City. But one child graduated in 2004 and the other in 2008. We didn’t move away, so now it’s payback time. And that’s generally the case – families don’t leave the City as soon as their children grow up – if they did, the City would have gone bankrupt long ago.
But in temporary housing such as Oakwood, parents are much more likely to locate in the City strictly for the time their children are attending school here. Oakwood is on its way to becoming a million-dollar annual drain on the City, and there’s nothing anyone can do about it.
Another shuttle transports Oakwood residents to East Falls Church Metro. (Staff photos by George Southern)
By George Southern
November 16, 2009
George, do you suggest the City raise the tax rate on apartment complexes (I am uneducated on this matter and am not sure if that is legal or not, or easy to do)?
I understand your position by saying there is a $1 million drain per year but that is only taking into consideration school costs which is only about half the City’s annual budget. Maybe a better evaluation would be total tax dollars taken in by the City from Oakwood and then true cost of services going to Oakwood, take that ratio and compare it to the ratio the average home pays vs. true cost of City services. I do not have time to do the research or have any idea what the results would be, but I would like to know how the two ratios compare.
Thinking about what Tony commented, it occurred to me that the average single family rental home occupants could not possibly be paying their $20,000 per student per year either, figuring that the rent money is what the landlord uses to pay real estate taxes. Does this mean that all rental units are a drain on the city?
I understand from the Washington Post that 40% of the living units in FC are rentals. What part are apartments, what part single family homes?
Even SFH owner’s don’t pay $20,000 per year for Real Estate Taxes (which only covers the cost of schools) which means all homes are a drain, even owner occupied, but I think George is pointing out that sooner or later a SFH will not be sending a child to school while Oakwood will always be sending children to school.
I think it is just the nature of things. Our cost per students is very high here in the City. You put hundreds of households within an acre or two and it makes getting certain services to that community very easy but it would be impossible to charge the apartment building millions of dollars a year because they would never build the building in the first place.
I’ve been learning about some of this stuff and I probably still don’t totally understand – but I think the issue isn’t renters vs. owners but apartments vs. condos/townhouses/houses. The real estate tax on a single family home is not impacted at all (as far as I know) by whether or not the owner lives there or a renter lives there. So, a rented single family home has no different impact on the City than one lived in by the owner (small note below on that). Same thing with townhouses and condos.
Apparently, the tax on apartments is calculated differently than condos – and apartments bring in a lot less in real estate taxes (something about how the value of condos and apartments are assessed differently). I have no idea why it works this way – but it’s obviously not a good thing for a city our size. Not only do apartments generate less revenue, they have a higher density of school kids than condos – so the costs and revenue numbers are going in opposite directions.
Anyone living in the City and sending kids to school is costing the City more than they’re paying in taxes. This is why developing a stronger business tax base is really important. It’s also why it’s important to keep the City a nice place to live for individuals and families without kids in the schools.
A note about rental houses – they’re actually more likely to have school kids in them than owner occupied houses – so on the whole they probably do cost the City more money. This is because people love our schools. It’s easier to move into the City and rent a house so your kids can go to school here instead of trying to buy a house in the City.
In my opinion – this is a good problem to have. The fact that our schools are desirable is good – we just need to figure out how to balance that. I have no idea what we can do about a situation like Oakwood – other than be careful not to replicate it (I think George’s numbers on Pearson Square in an article a week or so ago were wrong – I’m still waiting to get the details on that – so it’s not like all apartment buildings are a huge drain on the City).
Also, I really like the fact that my kids go to school with such a diverse group of kids. I think the kids from Oakwood bring a lot to our schools.
I think Pearson Square pays at the condo rate despite being apartments due to the condo to apartment conversion between approval and completion. I could be wrong but I think I remember hearing this.
I’ve learned a little more….
All property in the City is taxed at $1.07 per $100 of assessed value (well, not for long.. that $1.07 is bound to go up). So, the issue isn’t how a property is taxed – it’s how it is assessed.
Residential houses are assessed based on comparable sales figures and things like that. I guess it’s harder to do that for commercial properties so they use other approaches. I think in the case of Oakwood they use an “income approach.” What’s that? According to the City’s web site: “The income approach uses an analysis of relationship of rental income to market value sales price.”
I’m not really sure what that means.
So, my guess is that the process for assessing the value of condos is different than assessing apartments – and it makes sense (I guess) that apartments are less valuable than condos.
To find out everything you ever needed to know (not really) about how the City assesses real estate values you should check out this page: http://www.fallschurchva.gov/content/government/departments/adminserv/refaqs.aspx?cnlid=1395
Sooner or later, all of these renters (resulting in increased density) are going to spur commercial development and filling of the first floors of our mixed use buildings, right? That’s what the developers tell us when they build them – you’ve got to have density to bring in commercial development. Then, the commercial tax base will support all of those residents. Patiently waiting…..
Good story George. Exactly the point I was writing about a couple of weeks ago, why the city can’t maximize revenue or conversely understanding the city’s burdens. I guess we may never know what would have happened if Atlantic Reality built that 10 story (or 12 can’t remember now) apartment complex where the bowling alley is now, with no retail except a grocery store (which is nice). I still don’t believe what was proposed on the south side of city center is sustainable for our little city. We are just learning thanks to the FC Times………
For what it’s worth, here’s what it’s worth, based on the most recent assessment: Land – $26.7 million, Improvements – $45.7 million, Total – $72.4 million. The complex is owned by a Los Angeles firm.
Oakwood was buil in 1974. Apparently the price for the land, which was sold in January 1972, was $342,500.
The Orange Line was extended to EFC in June 1986, but the route probably was determined by the late 60s.
Before we moved to Falls Church my children attended Fairfax Schools. Each year we were required to fill out an Impact Aid Student-Parent survey. It asked whether a parent worked on a federal property. From the FCPS website:
“Impact Aid is a federal grant program that was designed to lessen the impact of federal activity on the operating budgets of local school systems. FCPS receives approximately $3,500,000 annually from this grant program. ”
My impression was that the school system was reimbursed some amount for each student whose parent worked on certain federal properties. You can find the form on the FCPS website. Do the Falls Church schools participate in this program? I am assuming the State Department would qualify.
Waiting to hear from a school board member……..
From the US Department of Education website it looks like this aid is available to school districts in which the Federal Government owns property. So even though we are hugely impacted, we probably don’t qualify… It doesn’t seem fair.
After a request initiated by Ms. Wodiska and me, our School System did survey parents a few years ago to see if we could qualify for federal impact aid. We had to reach a certain percentage of parents employed on federal property, and the responses fell short of the required percentage.
Kieran – With the number of federal employees (therefore employed on federal property? or do they have to be military service members?) and foreign service people in Oakwood and owning/renting around town, I think this warrants a revisit. For those interested, it would be helpful to post the data here (the percentage we had vs. the percentage required and the date the survey was done).